In the developing lung, different generations of conducting airways arise through reiterated branching of epithelial tubules to form the bronchial tree. This process is accompanied by rapid changes in gene expression and dynamic establishment of proximal-distal epithelium fate of the newly formed bud. It is also intriguing how changes in gene expression are so quickly accomplished to precede or parallel with the morphological and cell fate changes occurring in developing buds. Genetic data in multiple organisms indicate that miRNA-mediated gene regulation plays an important role in establishing local and dynamic gene activities that are critical for cell fate determination and morphogenesis. Conditional deletion of Dicer, the RNase for maturation of miRNAs, in distal lung epithelial cells disrupts lung morphogenesis and the expression patterns of several important genes, including FgflO, strongly suggest the critical role of miRNA in developing lung buds. The objective of this project is to study the mechanisms of miRNA pathway that control dynamic gene expression during establishment of proximal-distal cell fate in mouse embryonic lung. Our central hypothesis is that down-regulation of gene expressions mediated by miRNAs promote the differentiation of distal epithelial progenitor cells to form the nascent proximal structure in bifurcated budding. We have strong preliminary data to support this hypothesis, and three Aims have been designed to test this hypothesis. In Aim one, we propose to study the broad function of miRNA pathway in proximal-distal patterning of the lung by generating mutant mice in which Drosha or Agonaute2 is specifically mutated in lung epithelial cells. In the Aim 2, we will test the regulatory relationship and functions of several miRNAs in regulating their predicted targets both in cell line and in vivo by generating transgenic mice. In Aim 3, we proposed to analyze global transcription expression profiles of miRNAs and mRNAs in the distal progenitor cells and in the newly formed proximal epithelial cells, and to identify key miRNAs and their targets in the proximal-distal cell differentiation. Very little is known about how the dynamic gene regulation is achieved and the role of miRNA pathway in this process. These proposed studies will significa by miRNA, and how the proximal-distal pattern is properly established in developing lung.